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Sears shares tumbled as much as 14 per cent on Wednesday after the struggling retailer warned that there is “substantial doubt” over its ability to continue operating as a company over the next year.

In its annual report, released after the market closed on Tuesday, the company, which also operates the Kmart chain, said: “Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern.”

Shares are currently trading 10.8 per cent lower at $8.12.

The company, which is steered by billionaire hedge fund investor Eddie Lampert who owns about 48 per cent of Sears, attempted to allay concerns over its balance sheet by adding that it believes the execution of its restructuring plans, which include cutting costs by $1bn and reducing its debt and pension obligations by $1.5bn, should help it mitigate this doubt over the next 12 months.

Sears has accumulated more than $10bn in net losses in the past six fiscal years while its shares have lost 89 per cent of their value over the past five years, leaving its market capitalisation at $865m. The losses reflect the department store chain’s failure to adapt to a far more competitive retailing environment where consumers are increasingly shopping online while demanding better in-store experiences.

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